HANOI: Fifteen Asia-Pacific countries on Sunday signed the world’s biggest free trade deal, seen as a huge coup for China in extending its influence.
The Regional Comprehensive Economic Partnership (RCEP) includes 10 Southeast Asian economies as well as China, Japan, South Korea, New Zealand and Australia. Its members account for approximately 30% of global GDP.
The agreement was first proposed in 2012 and was eventually sealed at the end of the Southeast Asia summit as leaders worked hard to get the pandemic economy back on track.
“Under the current global circumstances, the fact the RCEP has been signed after eight years of negotiations brings a ray of light and hope amid the clouds,” said Chinese Premier Li Keqiang after the virtual signing.
“It clearly shows that multilateralism is the right way, and represents the right direction of the global economy and humanity’s progress.”
The agreement to reduce tariffs and open up trade in services within the EU does not include the United States and is seen as a Chinese-led alternative to replace the now-abolished Washington trade initiative.
Alexander Capri, a trade expert at the Business School of the National University of Singapore, said that RCEP “consolidates China’s broader regional geopolitical ambitions surrounding the “Belt and Road” initiative.
“It’s sort of a complementary element.”
But many of the signatories are battling severe coronavirus outbreaks and they are also hoping the RCEP will help mitigate the crippling economic cost of the illness.
Indonesia recently tumbled into its first recession for two decades while the Philippine economy shrunk by 11.5 percent on-year in the latest quarter.
“Covid has reminded the region of why trade matters and governments are more eager than ever to have positive economic growth,” said Deborah Elms, executive director of the Asian Trade Centre, a Singapore-based consultancy.